I am Professor of Finance and Economics at Lipscomb University and a Senior Fellow at the Beacon Center of Tennessee. I write a column at Forbes.com that normally appears Sundays. Follow me on Twitter @RichardJGrant1

The Faux Morality of Big Government and Anti-Gouging Laws

I am less afraid of hurricanes than I am of voters. Luckily, I live in a place where the danger from either is limited. That is a roundabout way of saying that I live in an inland “red state” where my neighbors have refrained from voting to tax my employment income, do not require me to join any trade union, and do trust me to carry a handgun.

When a hurricane struck the Northeast, my family and I were not directly affected. But when voters in the Northeast went to the polls, we were affected. That is not to suggest that anyone in my state would begrudge the use of federal funds to provide emergency assistance, though they might believe that state and local governments are much better suited for the planning and delivery of such emergency services. They might also question the wisdom of cycling the funds through Washington, D.C.

My state is also the source of volunteers, people who have contributed not only their private funds, but also their time and presence to give direct emergency assistance. If anything is begrudged, it is the passage by voters (through their representatives) of laws and regulations that make it more difficult to render assistance as they make it more difficult to live.

Life is made more difficult when voters shift powers and resources away from the local and state levels up to the federal level. For most of what we do, central planning is an extremely poor substitute for the individual planning and free association of private individuals. Federal regulations and the excessive taxes needed to pay for federal transfer programs (especially those of questionable constitutionality) are just another layer of insult heaped upon our more modest local errors.

Foolish editorialists suggested that the response to Hurricane Sandy demonstrated the efficacy of big government. But more sober reflection suggests the opposite. Those countries where people are least able to respond to natural disasters are Third World countries, which are characterized by the lowest levels of economic freedom. A Third World government is one that invariably overburdens its people with tax and regulatory restrictions on commerce, with the possibility of waivers purchased on the side. The result is poverty.

On economic freedom, most voters seem not to care that the United States no longer leads the world. They seem unaware of the link between their votes and four years of economic stagnation. They seem to believe that big government saved them from an even greater financial crisis, apparently unaware that the financial industry, along with the health-care industry, were already among the most heavily regulated in America.

Under these burdens, we are less able to help the people of the Northeast, just as they are less able to help themselves. Entrepreneurs would find a way to deliver gasoline and generators from other parts of the country, but they would risk prosecution for “price gouging” by the state attorney general were they to charge a price sufficiently high to cover the extra costs of the special shipments. So entrepreneurs stand down, and the people of the Northeast wait in gas lines.

The faux morality of anti-gouging laws does not cause hurricanes, but it does exacerbate shortages and the resultant suffering. A state’s disaster preparedness should include the repeal of such hindrances as anti-gouging laws — even in my red state.

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You wrote:“Foolish editorialists suggested that the response to Hurricane Sandy demonstrated the efficacy of big government. But more sober reflection suggests the opposite. Those countries where people are least able to respond to natural disasters are Third World countries, which are characterized by the lowest levels of economic freedom. A Third World government is one that invariably overburdens its people with tax and regulatory restrictions on commerce, with the possibility of waivers purchased on the side.”

There was deft bit of sleight of hand in this paragraph. You started off by discussing Hurricane Sandy and its impact upon the North Eastern seaboard. The misdirection was on the discussion of the response to this disaster by editors who argued that this showed the efficacy of “Big Government” in responding. They were of course referring to the US Federal Government in general and FEMA in particular. Your response was to shift the discussion, carefully avoiding any mention of FEMA, to third world countries and how their central governments responded (notably providing no details). In fact, you are incorrect, the US government’s response was indeed a strong case for services that state and local government could not possibly supply. With the infrastructures of these states disabled and often under water, local and state governments were unable to respond effectively. Exactly because the there were large portions of the United States not devastated, the Federal government could bring the needed resources that effected areas could not.

Further, Hurricane Sandy shows how empty the words of conservatives really are. Conservatives, libertarians, and even the followers of Ayn Rand are all in the same lines with the rest of the unfortunate people to get government relief of some kind or another. They are not turning away the National Guard or FEMA or other government workers who are assisting those in need. They are taking all of the “Big Government” assistance that they need and can get. Your blog explains exactly why the Republican Party lost the popular vote in five of the last six presidential elections, it is totally divorced from the realities of the majority of the American people.

All American want the US government to help them when they need help. The difference is that most Americans are honest and admit that they want the Government to help them. They like Social Security, Medicare, Unemployment Insurance, &c. Conservative talk, talk, talk about “Small Government’ and “Cutting Spending” but do the exact opposite in practice. Every Republican administration since 1980 has increased government spending and expanded government programs. They do cut taxes but borrow the difference, driving up the debt and deficit. They talk the talk but do not walk the walk. A sizable majority of the US electorate would rather have a government that says what it means and means what it says. The Democrats say that government should help the American people and does that and then says “We should pay for it in taxes”.

Actions speak louder than words and in action, everyone is a statist. So why not elect politicians who are open and honest statists instead of hypocrites who say that they are not statists but act like they are.

Big-government supporters demonstrate their own lack of insight when they claim that it is a “sleight of hand” to compare the relatively weakened capability of a First World, but too big, government to the causes of a Third World government’s weakness. Poor people (or in our case, less wealthy than we should be) are less able to respond to any crisis, whether they are close to the affected area or not.

Although I was explicit “not to suggest that anyone in my state would begrudge the use of federal funds to provide emergency assistance,” we should not forget the context and the opportunity cost created by the total impact of the federal government. The more that a government tries to do for us, the less well it is likely to do anything. If a FEMA-like organization is a high voter priority, then the government should focus on making it work well (however they define that). But if the provision of everything is a high voter priority, the absurdity of the big-government religion becomes apparent.

We note also that the governor of New Jersey made a high-profile pitch for federal funding while his attorney general apparently had nothing better to do than look for “price gougers” to charge. At the same time, volunteer electrical workers from out-of-state utilities were effectively turned away because they were not members of trade unions. After spending (wasting) their time and money, those volunteers returned to their right-to-work states. Perhaps the voters of the Northeast need to rethink their own governmental priorities.